1970 - 1979: The First Enlargement of the European Union

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  • 0:02 Europe in the Seventies
  • 0:39 Exchange Rates
  • 2:33 New Members
  • 4:49 Parliament
  • 5:29 Lesson Summary
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Lesson Transcript
Instructor: Christopher Sailus

Chris has an M.A. in history and taught university and high school history.

In this lesson, we explore the 1970s and the growth of the institutions that have become today's European Union (EU). The 1970s were a time of growth and greater economic integration for the fledgling EU.

Europe in the Seventies

As you have gotten older, you've likely found that you have to make more and more 'adult' decisions. Whether it's paying taxes, deciding to move to a new home, or various other tasks, as we enter adulthood there's a whole new range of choices we have to make. In many ways, the fledgling European cooperative that became the European Union (EU) entered that period of early adulthood in the 1970s. Whether it was deciding to continue its integration or admit new members, the six founding members of the European Economic Community (or EEC) faced several decisions in the 1970s that dictated the future course of European cooperation.

Exchange Rates

One of these important decisions came in regards to currency. Large parts of the economies of the six founding nations - Italy, France, West Germany, Luxembourg, Netherlands, and Belgium - were already either united or controlled by a common, European council or committee. For example, the Common Agricultural Policy, which came into force in the 1960s, controlled the production and distribution of food and set prices for European farmers. Additionally, any tariffs that existed between the six nations had been gradually eliminated over the past two decades, creating a free trade zone between the member states.

With this large-scale integration already in place and prices in several economic sectors already set by a European commission, the EEC countries decided it made sense to begin moving toward a single, consolidated currency for all EEC states. Though this would not become a reality for decades, the EEC first commissioned a plan for moving the six nations toward a single currency in 1970.

As a result of this plan, all six member states took measures in the early 1970s to ensure that currency fluctuations did not significantly harm one state for another's economic benefit. In 1971, for example, the EEC countries agreed to harmonize their domestic budgets in order to combat wild fluctuations. The following year the EEC implemented the first real control on currency fluctuations.

The exchange-rate mechanism (or ERM) laid out rules and specifications limiting the amount of change EEC currencies could make in relation to one another. From 1972 forward, no member state's currency was allowed to be worth more than 2.25% more than any other. When market volatility tried to push EEC currencies past this percentage mark, loans or other financial measures were taken through the ERM to stop this. The semi-fixed currency management system remained in effect until the Euro was introduced.

New Members

In addition to adding new mechanisms to manage currency, the 1970s also saw the EEC add new member states. In 1973, Denmark, the United Kingdom (UK), and Ireland joined the EEC, with Denmark and the UK leaving the upstart European Trade Association to do so. This marked a significant change in EEC policy - though several states had applied to join the EEC in the 1960s, the organization had been reluctant to admit new members. Issues surrounding the economic impact of admitting new economies (especially one as large as the UK's) and age-old suspicions and rivalries (for instance, French President Charles de Gaulle did not like the British) had hindered earlier expansion.

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